How does Baskin-Robbins stay in business?

December 24, 2009 7:50 AM

How does Baskin-Robbins stay in business?

Baskin-Robbins has over 5000 franchise locations. They're open year round, even in the damp Pacific northwest. They cannot get a ton of foot traffic in some of these locations, especially since some that I know of are not in pedestrian friendly spots. Are ice cream cakes and a couple of hours a day of ice cream cones really high margin enough to sustain a retail location? How is ice cream a profitable business? I am surprised that they are able to sustain so many stores. Thanks

posted by crazycanuck to Work & Money (22 answers total)

Ice cream's cheap to make and (if B-R is anything like the ice cream chain I worked at) workers make crap pay, even managers. The markup's crazy and expenses are relatively low.
posted by oinopaponton at 7:58 AM on December 24, 2009

Toddlers and elementary school kids don't care that it's cold and rainy outside. They still want to go to the ice cream shop for their special treat or party.
posted by mbrubeck at 8:01 AM on December 24, 2009

It seems to me that their business model is pretty simple: Ice cream is delicious.

Other than that maybe the key is low overhead? Rent, power to run the freezers, minimum wage for one or two employees, and distribution? As long as you keep it frozen ice cream stays good forevs, right?

I mean come on, they've got thirty-one flavors ffs... who could shut that down?
posted by Gainesvillain at 8:02 AM on December 24, 2009 [3 favorites]

A lot of the locations are now conjoined with Dunkin Donuts. Doughnut sundae anyone?
posted by mrsshotglass at 8:08 AM on December 24, 2009

If a franchise location goes under, do you really think B-R loses any money? That's the whole point of it being a franchise.
posted by Lemurrhea at 8:09 AM on December 24, 2009 [2 favorites]

In my city, they survive by being the low-class, low-price alternative to ColdStone and some locally-owned ice cream and gelatto shops. From the looks of their buildings and appliances, and the sullen teenagers behind the grubby freezer cases, I'm guessing the franchisees are making bank.
posted by M.C. Lo-Carb! at 8:12 AM on December 24, 2009 [1 favorite]

One of the great things about franchising: You transfer so much of the risk on to the franchisee. They've always struck me as similar to Subway, which also has an absurd number of locations. They are cheap to run (cheap labor and materials) and sell a somewhat desirable product.
posted by PhillC at 8:19 AM on December 24, 2009

The manager of a Coles Bookstore once told me that the store was in the red Q1-Q3 but the profit in Q4 (specifically Christmas) was enough to float them the rest of the year. Maybe the summer season is enough for BR to survive.
posted by cranberrymonger at 8:26 AM on December 24, 2009 [1 favorite]

People I've known who work in establishments that serve ice cream have told me that ice cream sales do not necessarily decrease in cooler / cold times of year (contrary to most people's assumptions). Also, a lot of those B-R stores are in malls, and people will eat pretty much anything, anytime in a mall.
posted by aught at 8:30 AM on December 24, 2009 [1 favorite]

ice cream sales do not necessarily decrease in cooler / cold times of year (contrary to most people's assumptions).

true.

employee of Kopps Custard in Milwaukee once told me they sell more frozen custard in February than August, and I know -20 weather never stopped me getting my custard on. I recall standing in the freezing wind of the courtyard of the one on Layton, looking at the frozen water sculpture and rapturously pounding down some brandy eggnog along with like 70 other fellow custard freaks.
posted by toodleydoodley at 8:38 AM on December 24, 2009

Yeah, I worked at a Baskin Robbins in high school and we were just as busy in the winter as in the summer. Even now, my husband's family gets an ice cream round (think ice cream cake without the cake) every Christmas, though they've switched to Chocolate Shoppe. I can't be the only person who's noticed that the quality of the ice cream there has really decreased.
posted by sugarfish at 8:55 AM on December 24, 2009

I've lived near a B&R for seven years. I've noticed during this time that the scoops have gotten smaller and the price has increased from $2.10/scoop to something like $3.50/scoop.
posted by pseudostrabismus at 9:01 AM on December 24, 2009

Back when I worked at a Carvel, an important component of what kept us afloat during the winter was the regulars who ate ice cream for dessert, come rain, shine, or snow. In particular, our store had a healthy contingent of Caribbean Islanders who literally loaded up on half-gallons of Rum Raisin and Butter Pecan ice cream. Those flavors were the biggest hit in the store. Don't underestimate the impact of even a few regular customers.

I'd say that every franchise finds its winning and losing points, and adjusts accordingly. Ultimately, Gainesvillian has it. Ice cream is a classic treat, and people will go out of their way to get it when they want it. Less often in the cold, but the cravings still happen for some. And, some people just don't consider their day complete without a scoop of ice cream for dessert, year-round.
posted by Citrus at 9:29 AM on December 24, 2009

Perhaps apocryphal (or not), but I once read that Boston has the highest per-capita ice cream consumption in the US.

Then again, I found this:

"The top three cities in America that purchase the most ice cream on a per capita basis are: Portland, Oregon; St. Louis, Missouri; and Seattle, Washington."

Not warm states!

Additionally, I found a chart that indicates ice cream consumption stays fairly consistent, decreasing only from about 26 to 24lbs (per person? that's what it says) over the past 35 years.
posted by rhizome at 9:34 AM on December 24, 2009

My neighborhood BR is definitely less busy in the Montana winter. But in the summer, the line is sometimes out the door. It's been around for at least 20 years in the same location, so it must all even out.
posted by The Deej at 9:35 AM on December 24, 2009

I've known of a few businesses (not BR) that are designed to lose money. It never made much sense to me but had something to do with offsetting large profits from their other businesses for tax purposes. A BR franchise would be ideal for this since the operating expenses are not a lot, so even if the outlet is not making money, it's not losing a lot either.
posted by Yorrick at 10:32 AM on December 24, 2009 [1 favorite]

One thing I've noticed about ice cream stores, even fancy ones like Ben & Jerry's, is how few people work there at a time. While a Starbuck's will have five employees and a manager, I always see ice cream places with literally one employee working.
posted by drjimmy11 at 11:43 AM on December 24, 2009

Alot of Baskin Robbins are now combined with Dunkin Donuts. I thought the idea behind that was to ameliorate this issue for both stores.
posted by amethysts at 11:59 AM on December 24, 2009

According to an article about some displeased franchisees who sued the corporation, the average B-R franchise has annual sales of $200,000 to $300,000. That's not a lot, but it's certainly enough to sustain a store.

I've known of a few businesses (not BR) that are designed to lose money. It never made much sense to me but had something to do with offsetting large profits from their other businesses for tax purposes.

To some extent this is possible and happens, but it's more likely (due to IRS distaste for blatant tax shelters) that a business simply has a "tax loss" -- when you deduct all business expenses (e.g. utilities, rent, wages), as well as depreciation of capital purchases including all your refrigeration equipment, you pay no or virtually no business taxes.
posted by dhartung at 3:40 PM on December 24, 2009 [1 favorite]

How does Baskin-Robbins stay in business? ... They're open year round, even in the damp Pacific northwest.

Two of the four BR stores in Eugene-Springfield, Oregon have closed. One about 5 years ago, another this summer. And I'm just taking baskinrobbins.com's word for it that the other two are still there.
posted by neuron at 10:04 PM on December 24, 2009

This commercial for B-R runs constantly on cable tv in Northern California and it's cold outside. Hearing "ice cream and cake" repeated like that breaks people down.
posted by sciatica at 12:28 AM on December 25, 2009

I just wanted to say that, at least for me and a lot of people I know, the temperature outside has practically no effect on what particular foods we want to eat. The only exception is I don't want a hot drink when it's hot outside, but I'll eat anything, cold or otherwise, when it's cold outside. My husband and I eat ice-cream year-round.

Also, nthing that most ice-cream stores seem to have only one employee working most of the time, unless it's a popular store.
posted by Nattie at 11:52 AM on December 25, 2009